This page was added to your Bookmark. Please Sign Up or Log In first. Tobacco companies have always offered high dividends, and associated with strong balance sheets. The three big players in the industry are Altria Group Inc. MO , Reynolds American Inc. RAI and Lorillard Inc. The trio has similar valuations and comparable yields. These companies hailing from an unhealthy industry are poised to continue raising their safely maintained dividends.

They will find plenty of tobacco huffers in the developing world, if they can build out their international presence. Below is some insight into the three. The company holds a voting stake in brewer SABMiller, owns wine businesses and has a financial services division. The company's diversification into smokeless tobacco is crucial to promoting its growth due to the declining market for smokers in the U.

Philip Morris USA is Altria's domestic cigarette manufacturing company. Philip Morris remains the largest tobacco company in the United States by both revenue and volume. It owns UST, the world's largest moist smokeless tobacco manufacturer by sales. UST provides Altria with the leading smokeless tobacco brands, Skoal and Copenhagen.

It has a strong dividend growth history. The company is in a strong financial position based on this, and has additional cash to further strengthen this position. Reynolds American offers cigarettes under the brand names of Camel, Pallmall, Winston, Kool, etc. It produces more savings brands, making it likely to benefit from consumers switching from premium to value brands. With a current dividend yield of 5.

Despite the fact that the company's revenues are downward trending and it has lost some of its market share, it continues to be an attractive investment from a dividend standpoint.

Lorillard LO The firm is a leader in e-cigarettes, electronic nicotine delivery systems that simulate the smoking experience, and gives people a healthy injection of nicotine.

Lorillard's flagship cigarette Newport is by far the most popular brand of mentholated cigarettes. With a current payout ratio of Revenue is expected to grow 7. However, Altria's size and revenues put both of them at a relative disadvantage in terms of sheer heft in the industry. Both competitors are subject to the same external events, i. Economic Downturns The tobacco industry is heavily taxed and due to steep cigarette price increases, some consumers have switched from premium brands to value or deep-discount brands.

Most of Altria's cigarette brands are classified as premium, making it more sensitive to these shifts in consumption than some other tobacco companies with more equally distributed product lines. Cost-conscious consumers may stop smoking or downgrade to a value-priced brand during economic slumps, but most consume the same brands at the same or slightly lower level.

As a result, Altria and other similar companies generally experience less of a decrease in revenues during recessions than the economy as a whole. On a Concluding Note With strong financial positions, it is nearly inevitable that these companies are well-placed to increase their dividends in the time to come. To choose any one of these may be a personal preference. But if I had to select it then would have been Altria, since it is, according to me, the best-performing stock for the last five decades.

It has increased its dividend for the last 44 years. The dividend growth rate was about Altria has a reputation as an income investor's staple. It has been inculcated in shareholder-friendly policies, and is expected to provide value for investors. This company has a record of healthy operating cash flows. The venture of the company into e-cigarettes will support growth in the near future. For decades, the company has pumped out steady profit growth, returning a great deal to shareholders, and is expected to do so in the near future.

This makes it an attractive stock to hold on to.

Copenhagen, Marlboro boost Altria profit - MarketWatch

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